Will any bank view my deals income instead of mine?

Discussion in 'Loans & Mortgage Brokers' started by Melbpositivegeared, 29th Feb, 2016.

Join Australia's most dynamic and respected property investment community
  1. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    I'm looking at a purchase where I'll have 20% equity in the deal. The property is a set of units (strata titled) with a 9% yield. The rents clearly cover all expenses and then some.

    I moved jobs and do not have the serviceability to make this work. Will any lender be able to view the deal's income instead of mine?

    Commercial finance could have been an option - However with only 20% equity I don't think I'd be able to get it.
     
  2. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    2,066
    Location:
    Bali
    Most banks would include the increased rents recieved as additional income.

    There is of coarse a fair bit of risk to you, if you cant service the finance without the rental income. What will a few weeks of vacancy to do you?

    Also what is the 'equity'. Is it genuine savings or increased property values? If the latter, are you sure you are not over-extending yourself?

    Just remember - "the deal of a life time comes around every day"

    Blacky
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    No.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    The income from the units are considered as part of the serviceability test. It may cover the cost of the loan (as assessed by the bank), but that's not all the expenses that need to be covered.

    The income also needs to cover your cost of living and any other liabilities you may have. A 9% yield won't do that in today's environment.

    Additionally many lenders won't recognise a 9% yield on the purchase price and reduce it to something they feel is more 'normal', such as 6%.
     
    Jake Milne likes this.
  5. JameZ

    JameZ Active Member

    Joined:
    18th Jun, 2015
    Posts:
    29
    Location:
    Sydney
    ANZ will consider your new employment after 3 months provided you've passed probation.
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    As determined by ?

    ta
    rolf
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    3,977
    Location:
    Canberra, Brisbane and Sunshine Coast
    Lenders take into account the rental income - but be careful here as some lenders will cap the yield to circa 6%

    Who advised on servicing? If it's one lender - seek a second opinion via a decent broker.

    Cheers

    Jamie
     
  8. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    The fact that I maxed out my serviceability and just moved jobs getting a $40k base salary pay cut.

    However... There are massive commissions in this role and as of next month I will be seeing my income sit a lot higher than it was previously- what are your thoughts on commissions and how long banks want to wait before they recognise them?
     
  9. Melbpositivegeared

    Melbpositivegeared Well-Known Member

    Joined:
    23rd Jan, 2016
    Posts:
    114
    Location:
    Melbourne
    Thanks Jamie,
    Having just changed jobs for less money I know I don't currently qualify for lending. However im keen to hear your thought on how much time before the banks will look at a rather steady record of commissions? I always thought it was a minimum of a year (still on a base salary, but making 2/3 of my income via Comms)
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    Anz wil look at 90 days for Comms case by case

    Ta

    Rolf
     
  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    Once you've got at least 3 months commissions behind you, there's quite a few lenders that will be willing to use this. It's not entirely straight forward and the longer history you've got the better.
     
  12. TaylorChang

    TaylorChang Well-Known Member

    Joined:
    2nd Jul, 2015
    Posts:
    200
    Location:
    Sydney
    What you can do is to partner up with someone has higher income to go into the purchase with you. For example, ask your family member who has good income to purchase the property with you.
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Good idea.

    Or better yet be part of a company or trust.